Troubled Indian operator Aircel could be heading towards liquidation as the company continues to struggle to sell its assets, while lenders rejected new proposals designed to cut debt and make overdue salary payments.
Aircel, which is majority owned by Malaysia-based operator Maxis, filed for bankruptcy in March after failing to reach an agreement with creditors on repayment of its growing debt pile, a request which was granted by the National Company Law Tribunal. However, having now reached the halfway point in an insolvency resolution process, there are increasing fears liquidation is on the horizon, The Economic Times (ET) reported.
The operator’s debt stands at INR500 billion ($7.3 billion), the bulk of which is owed to financial lenders.
In a meeting last week, the company’s issues heightened as lenders rejected a proposal to sell the operator’s fibre optic network and to make partial salary payments to workers which were due originally due in April. Aircel’s lenders are State Bank of India, Bank of Baroda and Punjab National Bank.
An unnamed ET source present at the meeting said “the situation is very grim since only few days are left and there is no sign of any asset sale”.
“Questions are being raised if enough is being done for the asset monetisation programme,” the source said.
Aircel’s insolvency resolution process will last for a total of 180 days, of which 90 have passed. ET added an extension of 90 more days can be applied for and, if there is still no resolution, the company will enter liquidation.
When granting bankruptcy protection, the tribunal noted Aircel’s enterprise business, spectrum, towers and other assets could help to save the operator.